Concessionary Travel

Wednesday 24th November 2010 Westminster Hall

15:59

[Karen Lumley (Redditch) (Con)]

It is a pleasure, Mr Weir, to serve under your chairmanship. I thank all hon. Members for giving up their time to attend this debate, which is about an important subject. Concessionary fares come with a history of controversy, and I have received many representations on the topic from my constituents. I hope that we get some clarification from my hon. Friend the Minister today.

Concessionary travel is vital to many communities, especially to the elderly, the disabled and those who live in rural areas, who would otherwise be cut off from basic services. Eleven million people in England qualify for the concession, which is no small number. Since the introduction of the scheme in Worcestershire in 2008, we have seen an 18% increase in the number of concessionary journeys made in the area, and the county has issued more than 100,000 cards.

The preservation of concessionary travel is a huge deal. For me, it is especially important to Worcestershire and my constituency of Redditch. When I was a Redditch councillor in 2004, the Conservative minority-control council scrapped the free bus pass on advice from council officers, who told us that it could not be sustained, but we soon realised what a gigantic mistake it had been. At the following local elections, Labour election literature branded me the “bus pass snatcher”. Needless to say, we lost the election, and I am certain that the issue was a significant factor in my losing Redditch in the 2005 general election. The Labour group reinstated concessionary fares in 2004, but the disaster that I have mentioned must not be repeated.

[Mr Robin Walker (Worcester) (Con)]

I congratulate my hon. Friend on securing this debate. She makes a strong point. Does she acknowledge that the problems of the present concessionary fares scheme affect county towns such as Worcester particularly badly, and that if the Government are going to switch it from the districts to the counties, it is essential that they reallocate the grant and not simply the cost of the scheme?

[Karen Lumley]

I totally agree with my hon. Friend. I shall probably come to that point later.

I fully support the announcement in the Government’s comprehensive spending review to

“Protect the statutory entitlement for concessionary bus travel, ensuring that older people can maintain greater freedom and independence.”

However, I am worried that it does not go far enough. I believe that the Government are not effectively addressing the serious concerns voiced by district and county councillors about the reduction to local government resource grants of 28%, the transfer of grant funding administration and the 20% cuts to the bus service operators grant. Together, those will have a significant effect on the provision of concessionary travel.

Today, I wish to speak particularly about the implications that the transfer of grant funding from district councils to the county council, mentioned by my hon. Friend the Member for Worcester (Mr Walker), will have for two-tier authorities. I stress that the problem is not the principle of transferring the funding to county councils, but the process of reallocating financial responsibility. Under current plans, the national scheme, which is administered locally, is to be withdrawn from district councils and transferred to county councils from April next year. In the past, councils have often had to deal with substantial shortfalls in funding for the scheme, and the latest development appears to be a continuation of this struggle.

[Harriett Baldwin (West Worcestershire) (Con)]

I congratulate my hon. Friend and Worcestershire colleague on securing this important debate. Does she agree that it would be desirable for councils, whether at district or county level, to be net-net—not out of pocket either way—when implementing the scheme on behalf of the Government?

[Karen Lumley]

That is the point that I am making. The proposal could be devastating for district councils, as they stand to lose significantly more than they spend. The system has been described as a mess by the District Councils Network. Changes to the formula need to be clear, transparent and accurately carried out, but many councils are concerned that the implications have not been properly thought through.

[Mark Garnier (Wyre Forest) (Con)]

I congratulate my hon. Friend on securing this incredibly important debate. To give substance to her argument, I should say that the leader of Wyre Forest district council told me only this afternoon that the potential cost to that one council would be £1 million if the worst option is selected. That is £1 million a year on top of the expected cuts resulting from the comprehensive spending review.

[Karen Lumley]

I thank my hon. Friend for that. I know that Redditch is looking at similar figures.

It is most likely that the transfer will result in neither a fair nor a transparent funding deal, some councils being hit harder than others through losing a disproportionate amount of grant funding.

[Simon Kirby (Brighton, Kemptown) (Con)]

On that point, Brighton and Hove city council is looking at a shortfall of £1.3 million. I suggest that a grant should be provided to cover the fact that some places are tourist destinations and have extensive bus networks as a result.

[Karen Lumley]

We in rural Worcestershire suffer from different problems, but I take that point on board.

The system is surely not in line with the Government’s message on fairness. I wholeheartedly support that message, but on this matter it is failing to get through. We need to ensure that funding is allocated fairly and equitably.

[Heather Wheeler (South Derbyshire) (Con)]

My hon. Friend makes a good point. The changes affect different parts of the country differently. In South Derbyshire, we are trying to negotiate friendly terms with Derbyshire county council. However, in the past Chesterfield and Derby city lost huge sums as a result of various changes.

I understand that consultation with the Government is going well. There are four options. In two we lose dreadfully, and in one we are just about okay. As for the option for the rural and tourism areas, I sincerely hope that our ally will come along with some good news later this afternoon.

[Karen Lumley]

Like my hon. Friend, I hope that we get some good news this afternoon. That is why we are here.

I seek clarification from the Minister. Will he assure the House that district councils will not be significantly financially disadvantaged as a consequence of the transfer of the administration of concessionary fares from district to county council level? If some councils are to be disproportionately affected, may I suggest a top-up fund to ensure that those councils likely to face substantial losses will not be financially disadvantaged?

In the light of the tremendous upheaval that the transfer will cause, the time scale allowed for councils is less than satisfactory, given that local authorities already have to deal with the comprehensive spending review. Will the Minister consider making representations to his Department to change the date required for publication of the scheme from 1 December? As we know, the spending allocation will not be published until later, which will leave local councils second-guessing how much will be needed.

[Justin Tomlinson (North Swindon) (Con)]

I congratulate my hon. Friend on securing this excellent debate. I feel like the odd one out, given that I represent a unitary local authority. Does she agree about the need for clarity, especially in the long term, so that local authorities can plan accordingly?

[Karen Lumley]

Wouldn’t that be nice! When I was a councillor, we worked year to year; we never got any further ahead than that. I totally agree with my hon. Friend. That would be fantastic.

I hope that the Minister agrees that clarity would allow districts fully to assess the impact of funding adjustments, and thus be able to make more informed decisions on the possibility of continuing local enhancements to the national scheme. For example, the Redditch scheme runs for the whole day, so whenever the buses start—it is usually 7 am—residents are able to use them. However, the national scheme starts at 9.30 am, and our residents lose out by not being able to travel during busy commuter times.

I shall speak briefly about the bus service operators grant. There was much speculation before the comprehensive spending review about Government plans to cut the BSOG entirely, but it proved to be unfounded. Instead, the grant will be reduced by 20% from 2012. I welcome the Government’s view that that reduction will have a marginal impact that can be absorbed without fares needing to rise. However, many do not believe that. The impact of individual cuts could be absorbed, but when combined with cuts to the revenue grant and changes in the funding system, they will have a potentially devastating effect. Will the Minister say exactly how these cuts can be absorbed, and what practical measures are in place to ensure that concessionary fares will not cause increases?

Many authorities are approaching the comprehensive spending review outcomes positively—I know that Redditch is—and they hope to be in a position to meet the loss in grant without a disproportionate impact on service delivery. However, some councils will not be so lucky. As we heard from my hon. Friend the Member for Wyre Forest (Mark Garnier), many will have to raise fares, reduce service availability, alter or cancel routes altogether and consider the impact on longer-distance rural bus services, all of which will significantly undermine the concessionary scheme. I have to ask what the point is of having a bus pass if there are no buses to use.

We understand that cuts in all services are a necessary evil, given the economic catastrophe left by the last Labour Government. However, the lack of clarity about the transfer of funding and about where the brunt of the cuts will fall is unacceptable.

[Rosie Cooper (West Lancashire) (Lab)]

I congratulate the hon. Lady on securing this debate. We have heard about councils that are net losers today. My local authority of West Lancashire is a net gainer and must contribute to the county these days.

Does the hon. Lady agree that concessionary travel is a lifeline for many pensioners? As for rural areas, she is absolutely right—there is no point in having a bus pass if there are no buses. Would she seek to ensure that all pensioners and all communities have fair and equitable access to concessionary travel, especially because, as I say, West Lancashire is a gainer?

In my area, my local pensioners want to have the option of concessionary rail travel on the same basis as their neighbours in Southport, Wigan and Liverpool. The pensioners of West Lancashire actually feel that they are not getting a fair deal out of concessionary travel and yet it is a net gainer, so there really are swings and roundabouts here.

[Karen Lumley]

I agree. There are obviously swings and roundabouts across the whole country and it would be nice if we had a uniform scheme whereby everybody could benefit; it would also be nice if we had the money to do that. However, I understand that we are in very difficult times and we have to make very difficult choices.

[Gavin Williamson (South Staffordshire) (Con)]

I congratulate my hon. Friend on securing this debate and I thank her very much for giving way. On that point, some of the current schemes that have been discussed are incredibly penal against rural district councils and we could actually see many services just being totally destroyed, such as those in my district council of South Staffordshire. We must have consideration for those authorities in the future, a point that she has been explaining fantastically well in this debate.

[Karen Lumley]

I thank my hon. Friend for that intervention.

Part of my constituency is rural and part of it is urban, so the problems facing those two parts are very different. That is one of the reasons why I wanted to speak today, because it is probably easier to get a bus in Redditch than it is to get one in Wychavon, which is the rural part of my constituency. So, as the hon. Member for West Lancashire (Rosie Cooper) said, it is only right that we treat people as fairly as we possibly can.

[Andrew Bridgen (North West Leicestershire) (Con)]

My constituency is very similar to that of my hon. Friend; it has both urban and rural areas. My district council has currently budgeted to spend £887,000 on the concessionary fare scheme this year, and it will receive a specific grant of £196,000 to meet part of that cost. However, my county council is concerned that, when this spending on concessionary travel passes to county councils, the formula grant will be reduced by more than that £691,000 shortfall—many other Members have expressed similar concerns about shortfalls today—and that that would put added pressure on a budget that has already been cut by 25%. If we want to avoid rural isolation, we must have a guarantee that we will not have a shortfall.

[Karen Lumley]

I agree with my hon. Friend and I look forward to hearing the Minister’s reply to the debate in a few moments’ time.

The Government have promised to examine smarter ways of administering the bus service operators grant subsidies, as well as a system that more clearly—

[Andrew Jones (Harrogate and Knaresborough) (Con)]

I congratulate my hon. Friend on securing this debate and I thank her for giving way.

In the area that I represent—Harrogate and Knaresborough—the actual cost to Harrogate district council of concessionary fares in 2009-10 was £2.9 million and yet the total special and formula grant received was only £1.5 million, leaving the balance of £1.4 million to be met by local taxpayers.

As the grant is reallocated, with responsibility for the service transferring to the county council, it is quite important that we allocate the grant and not the cost that county councils and district councils have been facing, so that the local taxpayers of Harrogate district council are not hit twice.

[Karen Lumley]

I totally agree with my hon. Friend and let us hope that we can move on to the type of system that he has just suggested.

We need to look at a system that allows local communities and local authorities to determine how the funding that is allocated to their area should be spent, but I do not think that we have seen any evidence of such a system yet. I ask the Minister today to reconsider the proposed changes in the light of the cumulative effects that they will have, not only on district councils and local authorities but on the provision of vital services for our elderly and disabled people. I also ask him to address these issues as a matter of urgency.

16:14

[The Parliamentary Under-Secretary of State for Transport (Norman Baker)]

I begin by congratulating my hon. Friend the Member for Redditch (Karen Lumley) on securing this debate on a very important issue. This debate has probably set a record in the House of Commons for the number of interventions in 15 minutes. I counted 10 interventions—so 11 speeches, as it were, in 15 minutes perhaps sets an example to other Members in other debates.

Let me say right away that the coalition Government are committed to protecting the concessionary bus travel scheme. We made that clear in the coalition agreement, the Chancellor reconfirmed that commitment in the recent spending review, and the Prime Minister has given his own support for the continuation of the scheme.

The scheme is of huge benefit to millions of people, allowing free off-peak travel anywhere in England and providing older and disabled people with greater freedom and independence. The concession enables older and disabled people to access facilities both within and outside their local area, and it helps them to keep in touch with family and friends. It also provides new leisure opportunities, so that when eligible people are visiting other parts of England on holiday, they can travel free on local buses at off-peak times, and it encourages those people to visit popular tourist destinations—such as Brighton and Hove—which brings benefits to the wider community.

About £1 billion is spent on concessionary travel every year. The Government currently provide funding for the scheme through two channels. The majority of the funding comes through the formula grant system, and since 2008, when the England-wide concession was first introduced, the rest of the funding has come through a special grant from the Department for Transport.

In line with the reduction in separate funding streams to local authorities, from April 2011 all funding for the scheme will be provided through formula grant, giving local authorities the freedom and flexibility they want in their use of funding. Overall, the Department for Transport is reducing the number of funding streams for local authorities from 26 to just four, which is in line with the Government’s general trend towards localism.

The Government are aware of how precious this benefit is to older and disabled people, which is why we are focusing our efforts on assisting local authorities to find efficiencies through reforms to the administrative and reimbursement arrangements for the scheme, rather than cutting back on the entitlement.

Only one change has been made to eligibility for the scheme—to increase the age of eligibility in line with the changes that are taking place to the state pension age. In fact, that change was introduced by the previous Government, and I understand that it was done on the basis that people are living longer, staying healthier for longer and tending to stay in work until later in life. That change will clearly assist with the financial sustainability of the scheme.

From April 2011, responsibility for administering the scheme will move from lower-tier local authorities such as district councils to upper-tier local authorities such as county councils. This reform will assist in overcoming a number of problems that have been identified by local authorities, stakeholder groups and operators. The change will enable efficiencies to be realised, through economies of scale and by reducing the number of negotiations with bus operators. It will also make accurate funding by formula easier, because there will be less variation in the size and characteristics of authorities. Furthermore, it will harmonise concessionary travel and wider transport authority responsibilities.

If individual councils have had a rough deal, such as the one in Harrogate, and other councils have benefited rather more in the same county area, such problems should therefore be eliminated by this scheme. I accept that it will not solve all problems, but that is one problem that can be eliminated by this move from districts to counties.

The Department for Communities and Local Government recently consulted on how the transfer of responsibility for concessionary travel will be taken into account in authorities’ funding allocations from 2011-12. That consultation was an opportunity for local authorities to influence decisions on the final distribution method. By the way, I should say that many of the points that have been raised by Members today are actually points for the Department for Communities and Local Government, in a sense, rather than for the Department for Transport. Clearly, I will do my best to answer those points, but the funding allocation is through the DCLG rather than the DFT.

A number of authorities, especially district councils—including my own district council in Lewes—have expressed concerns about the potential implications for their future financial position as a result of the administrative changes. That is the nub of the case that is being put today. Discussions have been taking place at official level between the DFT and the DCLG to try to ensure that the distribution method taken forward after the consultation does not result in unintended consequences for authorities.

It is important to remember that the figures presented in the DCLG consultation were only illustrative and that the actual effect on authorities is likely to differ, following final decisions on matters such as the amount of funding to be transferred from lower-tier to upper-tier authorities for concessionary travel and the level of floor damping to be applied to particular types of authority. In other words, the change will be phased in, which I think was one of the concerns expressed today. My hon. Friend the Member for Redditch talked about “top-up” funds. The DCLG’s preferred method is through damping and the provision of floors, to ensure that there is not a sudden cliff-edge. I am sorry to use all these terrible metaphors; they are official DCLG metaphors.

The overall amount of funding available for local government was set out in the spending review. DCLG will publish details shortly about the outcome of its formula grant consultation and how the overall funding pot will be distributed among authorities. The formula grant is allocated on the basis that the level provided overall is sufficient to enable authorities to deliver effective local services while ensuring that they do not set excessive council tax increases. In a sense, local authorities will be more able to decide how they allocate their funds than they have hitherto been.

The hon. Member for Brighton, Kemptown (Simon Kirby) asked about the effect on unitary authorities. I am afraid that I cannot give any specifics on that matter until the DCLG makes its announcement on the spending review, but I can say in general that all the comments made today are being noted by officials and will be passed back to the DCLG as part of ongoing discussions between our Departments. I also mentioned that the impact will be mitigated by the use of floors to prevent sudden changes in local government finance for individual authorities.

In her introductory comments, my hon. Friend the Member for Redditch asked whether the date for the publication of local authority schemes could be moved from 1 December. I am afraid that that is not possible. Travel concession authorities are required by the Transport Act 2000 to publish schemes four months before they come into force. It is not possible to amend the date without primary legislation, which she will understand could not be enacted before 1 December.

I am aware that concerns that have been expressed about the potential impact of the administrative changes on local discretionary concessions; I believe that the hon. Member for West Lancashire (Rosie Cooper) mentioned it. It is not the intention that the change in responsibility should have any impact on the additional entitlements offered by local authorities. The order laid before Parliament earlier this year to enact the change does not prevent upper-tier authorities from maintaining or introducing district or local level discretions where needs differ within different parts of a county boundary, for example. Nor does it prevent district councils from providing funding to county councils to administer discretionary concessions on their behalf.

Furthermore, district councils will remain able to consider discretionary travel schemes using the well-being powers in the Local Government Act 2000, so in theory, they could introduce concessionary rail travel within their areas if they wanted, irrespective of any move from district to county. However, local authorities should take legal advice when creating, amending or withdrawing discretionary concessions and should also ensure that they comply with their own disability equality schemes.

We are assisting local authorities to make efficiencies through reforms to the arrangements for reimbursing bus operators, on which we recently published draft guidance. We held a consultation on the new concessionary travel reimbursement guidance and will be issuing the final guidance to local authorities shortly, with a view to introducing changes to the reimbursement regime for schemes beginning in April 2011. I stress that it is for local authorities to decide whether they wish to take advantage of that guidance, but it will nevertheless be issued by the Department for Transport in order to enable local authorities to engage more effectively with bus operators.

The consultation sought views from stakeholders on the revised reimbursement guidance, which adopts a more directive approach to reimbursement calculations, requiring fewer data inputs and assumptions but leaving scope for local flexibility where appropriate. Analysis of historic reimbursement by travel concession authorities indicates that councils could make up to £130 million in savings under the revised reimbursement arrangements. The proposed new guidance is based on extensive new research carried out by the Institute for Transport Studies at the university of Leeds and will help to simplify the current system and enable more accurate reimbursement.

My hon. Friend the Member for Redditch mentioned the bus service operator grant. As she will know, all sorts of wild suggestions were made in the national press that BSOG was being abolished. I made it perfectly plain to the House in June or July that the Department values BSOG as a sensible contribution to ensuring good public transport. I therefore hope that it was not surprising that BSOG was retained with a cut of just 20%, which is below the average cut for revenue budgets in the spending review. That is a recognition from the Treasury and the Department for Transport of the value of its contribution to bus services. I spoke to the chief executive of the Confederation of Passenger Transport UK, which represents the five main bus companies, after the Chancellor’s spending review. The chief executive was hopeful that in general terms, the cut in BSOG could be absorbed without any increase in bus fares. That was a good outcome.

The concessionary fares scheme remains based on the same solid principle as ever: bus companies should be no better and no worse off as a consequence of the scheme. That is relevant when we consider the new guidance on reimbursement arrangements. Concern was expressed that the changes might affect the level of service provided. As I said, bus companies should be no better and no worse off as a consequence of their dealings with local authorities. Therefore, in principle, irrespective of anything else, there is no reason why service levels should be affected. The concessionary fares scheme, if it delivers its outcome, should not lead to a reduction in bus services.

I point out that the vast majority of bus services are commercial rather than subsidised, so the secondary and understandable concern expressed by my hon. Friend and others that local authority budgets will be stretched, as undoubtedly they will, would in any case relate at maximum level only to subsidised services, not commercial services, which are independent of local authority funding. That said, local authorities, particularly rural ones, provide subsidies for some bus services in their area, and they will want to consider how best to use their funding. I hope that when it comes to difficult decisions, local authorities will consider—as central Government have done in recent months—where they can make savings without affecting front-line services. Affecting front-line services through cuts is the easy option. Rather than resorting to unfortunate cuts, local government can make a number of savings—for example, by combining back-room functions—without affecting the public. I hope that local authorities will approach their budgets in that way.

I hope that I have been helpful in responding to hon. Members’ comments. I recognise that the issue is important—the turn-out has reinforced that—and I take it seriously. The Government’s overall intentions are, first, to protect the concessionary fares scheme, and secondly, for good environmental and social reasons, to get more people on buses. We do not want to pursue policies that have the opposite objective or consequence. We will take back the comments that hon. Members from all parties have made this afternoon and feed them through to the Department for Communities and Local Government, which will ultimately decide the allocation for local authorities.